SUBADVISORY AGREEMENT
AGREEMENT made as of the 1st day of February, 1997, between Xxxxxxx,
Xxxxxxx & Xxxxx, Inc., a Delaware corporation (hereinafter called the
"Manager"), and Bankers Trust Company, a New York corporation (hereinafter
called the "Subadviser").
WITNESSETH:
WHEREAS AARP Growth Trust (the "Trust") is a Massachusetts business trust
organized with one or more series of shares, and is registered as an investment
company under the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Manager desires to utilize the services of the Subadviser as
investment counsel with respect to certain portfolio assets of the Trust; and
WHEREAS, the Subadviser is willing to perform such services on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
it is agreed as follows:
1. The Subadviser's Services. The Subadviser will serve the Manager as
investment counsel with respect to the investment portfolio of AARP U.S. Stock
Index Fund (the "Series"), being one of the portfolio series of the Trust, which
is under the management of the Manager pursuant to an Investment Management
Agreement between the Manager and the Trust dated February 1, 1994, as
supplemented February 1, 1997.
The Subadviser is hereby authorized and directed and hereby agrees,
subject to the stated investment policies and restrictions of the Series as set
forth in the current Prospectus and Statement of Additional Information of the
Trust (including amendments) and in accordance with the Fund's Declaration of
Trust, as amended, and By-laws governing the offering of its shares and subject
to such resolutions as from time to time may be adopted by the Fund's Trustees
and furnished to the Subadviser, to develop, recommend and implement such
investment program and strategy for the Series as may from time to time be most
appropriate to the achievement of the investment objectives of the Series as
stated in the aforesaid Prospectus, to provide research and analysis relative to
the investment program and investments of the Series, to determine what
securities should be purchased and sold and to monitor on a continuing basis the
performance of the portfolio securities of the Series. In addition, the
Subadviser will place orders for the purchase and sale of portfolio securities
and, subject to the provisions of the following paragraph, will take reasonable
steps to assure that portfolio transactions are effected to the best price and
execution available. The Subadviser will advise the Fund's custodian and the
Manager on a prompt basis of each purchase and sale of a portfolio security
specifying the name of the issuer, the description and amount or number of
shares of the security purchased, the market price, commission and gross or net
price, trade date, settlement date and identity of the effecting broker or
dealer. From time to time as the Trustees of the Trust or the Manager may
reasonably request, the Subadviser will furnish to the Manager, Trust's officers
and to each of its Trustees reports on portfolio transactions and reports on
assets held in the Series, all in such detail as the Trust or the Manager may
reasonably request. The Subadviser will also inform the Manager, Trust's
officers and Trustees on a current basis of changes in investment strategy or
tactics. The Subadviser will make its officers and employees available to meet
with the Manager, Trust's officers and Trustees at least quarterly on due notice
to review the investments and investment performance of the Series in the light
of the Trust's investment objectives and policies and market conditions.
Additionally, the Manager will provide the Subadviser with a list of tobacco
producing companies that are subject to the stated restrictions of the Series.
In using its best efforts to obtain for the Series the most favorable price
and execution available, the Subadviser, bearing in mind the Series' best
interests at all times, shall consider all factors it deems relevant, including,
by way of illustration, price, the size of the transaction, the nature of the
market for the security, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the reputation,
experience and financial stability of the broker or dealer involved and the
quality of service rendered by the broker or dealer in other transactions.
Subject to such policies as the Trustees of the Trust may determine, the
Subadviser shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of its having
caused the Series to pay an unaffiliated broker or dealer that provides
brokerage and research services to the Subadviser an amount of commission for
effecting a portfolio investment transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Subadviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Subadviser's overall responsibilities with respect
to the clients.
It shall be the duty of the Subadviser to furnish to the Trustees of the
Trust such information as may reasonably be requested in order for such Trustees
to evaluate this Agreement or any proposed amendments thereto for the purposes
of casting a vote pursuant to Section 9 hereof.
In the performance of its duties hereunder, the Subadviser is and shall be
an independent contractor and except as otherwise expressly provided herein or
otherwise authorized in writing, shall have no authority to act for or represent
the Trust, the Series or the Manager in any way or otherwise be deemed
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to be an agent of the Trust, the Series or the Manager.
In furnishing the services under this Agreement, the Subadviser will comply
with the requirements of the 1940 Act applicable to it, and the regulations
promulgated thereunder.
2. Delivery of Documents to Subadviser. The Manager will furnish to the
Subadviser copies of each of the following documents:
(a) The Declaration of Trust of the Trust as in effect on the date hereof;
(b) The By-laws of the Trust in effect on the date hereof;
(c) The resolutions of the Trustees approving the engagement of the
Subadviser as subadviser to the Series and approving the form of this
agreement;
(d) The resolutions of the Trustees selecting the Manager as investment
manager to the Trust and approving the form of the Investment
Management Agreement with the Trust, on behalf of the Series;
(e) The Investment Management Agreement with the Trust, on behalf of the
Series;
(f) The Code of Ethics of the Trust and of the Manager as currently in
effect; and
(g) Current copies of the Series' Prospectus and Statement of Additional
Information.
The Manager will furnish the Subadviser from time to time with copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any. Such amendments or supplements as to Items
(a) though (g) above will be provided within 30 days of the time such materials
became available to the Manager and until so provided the Subadviser may
continue to rely on those documents previously provided.
During the term of this Agreement, the Manager also will furnish to the
Subadviser prior to use thereof copies of all Trust documents, proxy statements,
reports to shareholders, sales literature, or other material prepared for
distribution to shareholders of the Series or the public that refer in any way
to the Subadviser, and will not use such material if the Subadviser reasonably
objects in writing within five business days (or such other time period as may
be mutually agreed) after receipt thereof. However, the Manager and the
Subadviser may agree amongst themselves that certain of the above-mentioned
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documents do not need to be furnished to the Subadviser prior to the document's
use.
In the event of termination of this Agreement, the Trust will continue to
furnish to the Subadviser copies of any of the above-mentioned materials that
refer in any way to the Subadviser. The Trust shall furnish or otherwise make
available to the Subadviser such other information relating to the business
affairs of the Trust as the Subadviser at any time, or from time to time,
reasonably requests in order to discharge its obligations hereunder.
3. Delivery of Documents to the Manager. The Subadviser has furnished the
Manager with copies of each of the following documents:
(a) The Subadviser's most recent balance sheet;
(b) Separate lists of persons who the Subadviser wishes to have authorized
to give written and/or oral instructions to Custodians and the fund
accounting agent of Trust assets for the Series; and
(c) The Code of Ethics of the Subadviser as currently in effect.
The Subadviser will furnish the Manager from time to time with copies,
properly certified or otherwise authenticated, of all material amendments of or
supplements to the foregoing, if any. Additionally, the Subadviser will provide
to the Manager such other documents relating to its services under this
Agreement as the Manager may reasonably request on a periodic basis. Such
amendments or supplements as to items (a) through (c) above will be provided
within 30 days of the time such materials became available to the Subadviser.
4. Other Agreements, etc. It is understood that any of the shareholders,
Trustees, officers and employees of the Trust or the Series may be a
shareholder, director, officer or employee of, or be otherwise interested in,
the Subadviser, any interested person of the Subadviser, any organization in
which the Subadviser may have an interest or any organization which may have an
interest in the Subadviser, any such interested person or any such organization
may have an interest in the Trust or the Series. It is also understood that the
Subadviser, the Manager and the Trust may have advisory, management, service or
other contracts with other individuals or entities, and may have other interests
and businesses. When a security proposed to be purchased or sold for the Series
is also to be purchased or sold for other accounts managed by the Subadviser at
the same time, the Subadviser shall make such purchases or sales on a pro-rata,
rotating or other equitable basis so as to avoid any one account's being
preferred over any other account.
The Subadviser may give advice and take action with respect to other funds
or clients, or for its own account (collectively, "Other Accounts") which may
differ from the advice or the timing or nature of action taken with respect to
the Series.
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Nothing in this Agreement shall be implied to prevent the (i) Manager from
engaging other subadvisers to provide investment advice and other services in
relation to portfolios of the Trust for which the Subadviser does not provide
such services, or to prevent the Manager from providing such services itself in
relation to such portfolios; or (ii) the Subadviser from providing investment
advice and other services to other funds or clients.
5. Fees, Expenses and Other Charges.
(a) For its services hereunder, the Subadviser shall be paid a
management fee by the Trust according to the fee schedule
attached hereto as Schedule A.
(b) The Subadviser, at its expense, will furnish all necessary
investment facilities, including salaries of personnel required
for it to execute its duties faithfully.
6. Confidential Treatment. It is understood that any information or
recommendation supplied by the Subadviser in connection with the performance of
its obligations hereunder is to be regarded as confidential and for use only by
the Manager, the Trust or such persons as the Manager may designate in
connection with the Series. It is also understood that any information supplied
to the Subadviser in connection with the performance of its obligations
hereunder, particularly, but not limited to, any list of securities which, on a
temporary basis, may not be bought or sold for the Series, is to be regarded as
confidential and for use only by the Subadviser in connection with its
obligation to provide investment advice and other services to the Series.
7. Representations and Covenants of the Parties. The Subadviser hereby
acknowledges that it is a "bank" as defined in Section 202(a)(2) of the
Investment Advisers Act of 1940 and neither it nor any "affiliated person" of
it, as defined in the 1940 Act, is subject to any disqualification that would
make the Subadviser unable to serve as an investment adviser to a registered
investment company under Section 9 of the 1940 Act. The Subadviser covenants
that it will carry out appropriate compliance procedures necessary to the
operation of the Series as the Subadviser and the Manager may agree. The
Subadviser also covenants that it will manage the Series so that the Trust will
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code.
8. Reports by the Subadviser and Records of the Series. The Subadviser
shall furnish the Manager monthly, quarterly and annual reports concerning
transactions and performance of the Series, including information required to be
disclosed in the Trust's registration statement, in such form as may be mutually
agreed, to review the Series and discuss the management of it. The Subadviser
shall permit the financial statements, books and records with respect to the
Series to be inspected and audited by the Trust, the Manager or their agents at
all reasonable times during normal business hours. The Subadviser shall
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immediately notify and forward to both the Manager and legal counsel for the
Trust any legal process served upon it on behalf of the Manager or the Trust.
The Subadviser shall promptly notify the Manager of any changes in any
information concerning the Subadviser of which the Subadviser becomes aware that
would be required to be disclosed in the Trust's registration statement.
In compliance with the requirements of Rule 31a-3 under the 1940 Act, the
Subadviser agrees that all records it maintains for the Trust are the property
of the Trust and further agrees to surrender promptly to the Trust or the
Manager any such records upon the Trust's or the Manager's request. The
Subadviser further agrees to maintain for the Trust the records the Trust is
required to maintain under Rule 31a-1(b) insofar as such records relate to the
investment affairs of the Trust. The Subadviser further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act the records it maintains
for the Trust.
9. Continuance and Termination. This Agreement shall remain in full force
and effect for five months from the date hereof, and is renewable annually
thereafter by specific approval of the Board of Trustees of the Trust or by the
affirmative vote of a majority of the outstanding voting securities of the
Series. Any such renewal shall be approved by the vote of a majority of the
Trustees of the Trust who are not interested persons under the 1940 Act, cast in
person at a meeting called for the purpose of voting on such renewal. This
agreement may be terminated without penalty at any time by the Trustees, by vote
of a majority of the outstanding voting securities of the Series, or by the
Manager or by the Subadviser upon 60 days written notice, and will automatically
terminate in the event of its assignment by either party to this Agreement, as
defined in the 1940 Act, or (provided Subadviser has received prior written
notice thereof) upon termination of the Manager's Investment Management
Agreement with the Trust.
10. Voting Rights. The Subadviser shall be responsible for
exercising any voting rights of any securities of the
Series.
11. Indemnification. The Subadviser agrees to indemnify and hold harmless
the Manager, any affiliated person within the meaning of Section 2(a)(3) of the
1940 Act ("affiliated person") of the Manager and each person, if any who,
within the meaning of Section 15 of the Securities Act of 1933 (the "1933 Act"),
controls ("controlling person") the Manager, against any and all losses, claims
damages, liabilities or litigation (including reasonable legal and other
expenses), to which the Manager or such affiliated person or controlling person
may become subject under the 1933 Act, the 1940 Act, the Advisers Act, under any
other statute, at common law or otherwise, arising out of Subadviser's
responsibilities as portfolio manager of the Series (1) to the extent of and as
a result of the willful misconduct, bad faith, or gross negligence by the
Subadviser, any of the Subadviser's employees or representatives or any
affiliate of or any person acting on behalf of the Subadviser, or (2) as a
result of any untrue statement or alleged untrue statement of a material fact
contained in a prospectus or statement of additional information covering the
Series or the Trust or any amendment thereof or any supplement thereto or the
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omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement therein not misleading, if
such a statement or omission was made in reliance upon written information
furnished by the Subadviser to the Manager, the Trust or any affiliated person
of the Manager or the Trust expressly for use in the Trust's registration
statement, or upon verbal information confirmed by the Subadviser in writing
expressly for use in the Trust's registration statement or (3) to the extent of,
and as a result of, the failure of the Subadviser to execute, or cause to be
executed, portfolio transactions according to the standards and requirements of
the 1940 Act; provided, however, that in no case is the Subadviser's indemnity
in favor of the Manager or any affiliated person or controlling person of the
Manager deemed to protect such person against any liability to which any such
person would otherwise be subject by reason of willful misconduct, bad faith or
gross negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
The Manager agrees to indemnify and hold harmless the Subadviser, any
affiliated person within the meaning of Section 2(a)(3) of the 1940 Act
("affiliated person") of the Subadviser and each person, if any who, within the
meaning of Section 15 of the 1933 Act, controls ("controlling person") the
Subadviser, against any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses), to which the
Subadviser or such affiliated person or controlling person may become subject
under the 1933 Act, the 1940 Act, the Advisers Act, under any other statute, at
common law or otherwise, arising out of the Manager's responsibilities as
investment manager of the Series (1) to the extent of and as a result of the
willful misconduct, bad faith, or gross negligence by the Manager, any of the
Manager's employees or representatives or any affiliate of or any person acting
on behalf of the Manager, or (2) as a result of any untrue statement or alleged
untrue statement of a material fact contained in a prospectus or statement of
additional information covering the Series or the Trust or any amendment thereof
or any supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statement
therein not misleading, if such a statement or omission was made by the Trust
other than in reliance upon written information furnished by the Subadviser, or
any affiliated person of the Subadviser, expressly for use in the Trust's
registration statement or other than upon verbal information confirmed by the
Subadviser in writing expressly for use in the Trust's registration statement;
provided, however, that in no case is the Manager's indemnity in favor of the
Subadviser or any affiliated person or controlling person of the Subadviser
deemed to protect such person against any liability to which any such person
would otherwise be subject by reason of willful misconduct, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
12. Certain Definitions. For the purposes of this Agreement, the "vote of a
majority of the outstanding voting securities of the Series" means the
affirmative vote, at a duly called and held meeting of shareholders of the
Series, (a) of the holders of 67% or more of the shares of the Series present
(in person or by proxy) and entitled to vote at such meeting, if the holders of
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more than 50% of the outstanding shares of the Series entitled to vote at such
meeting are present in person or by proxy, or (b) of the holders of more than
50% of the outstanding shares of the Series entitled to vote at such meeting,
whichever is less.
For the purposes of this Agreement, the terms "interested person" and
"assignment" shall have their respective meanings defined in the 1940 Act,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission under said Act.
For the purposes of this Agreement, the terms "assets", "net assets",
"securities", "portfolio securities" or "investments" of the Series shall mean,
respectively, such assets, net assets, securities, portfolio securities or
investments which are from time to time under the management of the Subadviser
pursuant to this Agreement.
13. Notices. All notices or other communications required or permitted to
be given hereunder shall be in writing and shall be delivered or sent by
pre-paid first class letter post to the following addresses or to such other
address as the relevant addressee shall hereafter notify for such purpose to the
others by notice in writing and shall be deemed to have been given at the time
of delivery.
If to the Manager: XXXXXXX, XXXXXXX & XXXXX,INC.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
If to the Trust: AARP GROWTH TRUST
AARP U.S. STOCK INDEX FUND
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
If to the Subadviser: BANKERS TRUST COMPANY
Global Investment Management
Xxx Xxxxxxx Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx
14. Instructions. The Subadviser is authorized to honor and act on any
notice, instruction or confirmation given by the Trust or Manager in writing
signed or sent by one of the persons whose names, addresses and specimen
signatures will be provided by the Trust or Manager from time to time.
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15. Law. This Agreement is governed by and shall be construed in accordance
with the laws of the State of New York in a manner not in conflict with the
provisions of the 1940 Act.
16. Limitation of Liability of the AARP Mutual Funds, Trustees, and
Shareholders. It is understood and expressly stipulated that none of the
trustees, officers, agents, or shareholders of any AARP Mutual Fund shall be
personally liable hereunder. It is understood and acknowledged that all persons
dealing with any AARP Mutual Fund must look solely to the property of such AARP
Mutual Fund for the enforcement of any claims against such AARP Mutual Fund as
neither the trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of any AARP Mutual Fund. No
AARP Mutual Fund shall be liable for the obligations or liabilities of any other
AARP Mutual Fund. No series of any AARP Mutual Fund, if any, shall be liable for
the obligations of any other series.
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all such
counterparts shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have each caused this instrument to
be signed in duplicate on its behalf by the officer designated below thereunto
duly authorized.
XXXXXXX, XXXXXXX & XXXXX, INC.
Attest:/s/ By/s/Xxxxxxxx X. Small
------------------- ---------------------------
Name: Xxxxxxxx X. Small
Title: Director
BANKERS TRUST COMPANY
Attest:/s/ By/s/Xxxxxxx X. Xxxxx
------------------- ----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Managing Director
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Schedule A to the Subadvisory Agreement
for the AARP U.S. Stock Index Fund (the "Series")
dated as of ___________, 1997 between Xxxxxxx, Xxxxxxx &
Xxxxx, Inc. and Bankers Trust Company
FEE SCHEDULE
As compensation for its services described herein, Bankers Trust Company shall
receive a fee based on a percentage of average net assets calculated according
to the following annualized fee schedule:
Series Assets Annualized Rate
On the first $100 million 0.07 of 1%
On the next $100 million 0.03 of 1%
On the balance over $200 million 0.01 of 1%
Minimum annual fee: $75,000
The above fees exclude all custody charges. Valuations are made based on the
market value of assets held in the Account at the end of each calendar month,
and fees are charged quarterly in arrears based on one-fourth of the annual fee.
Fees will be prorated appropriately if Bankers Trust Company does not perform
services for a full quarter.
To assist Xxxxxxx and the AARP Investment Program in maintaining an appropriate
and competitive level of fund expenses during the Series' start-up phase,
Bankers Trust Company will apply a 15% discount to the above stated fee schedule
for the first 12 months of management. After this 12 month period expires, the
stated (standard) fees will be charged.
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